CHAPTER 1
passing on debt to future generations of Americans who would pay for it in higher taxes.30
In fact, both political parties are more preoccupied with the deficit than they need to be.
From 1946 to 1976, the national debt actually doubled in size.31 But because the economy was
growing faster than the debt, the debt shrank to 33 percent of GDP.32 In the meantime, an entire
generation of Americans enjoyed rapidly improving living standards. Between 1947 and 1973,
the economy’s annual productivity growth averaged 2.9 percent,33 and because low unemployment was the norm, it was a period of broadly shared growth. That changed beginning in 1980,
when the gains from productivity
growth started to go increasingly to
Table 1.1 Jobs and Income Policy Preferences of Affluent vs.
the wealthiest Americans.
General Public
Productivity is still on the
increase; it has grown an average of
Policy
2.3 percent annually since 1995.34 If
this well-established trend continues
The government in Washington
ought to see to it that everyone
for the next 25 years, and if prowho wants to work can find a job
ductivity gains are broadly shared
The federal government should
again, the real value of wages (the
provide jobs for everyone able
value once adjusted for inflation)
and willing to work who cannot
find a job in private employment
will be on average 75 percent higher.
That’s quite a jump in disposable
Source: Demos. Table 2 in Mijin Cha (December 7, 2012), “Why is Washington Reducing the
income. There is little reason to
Deficit Instead of Creating Jobs?”
doubt that this rate of productivity
growth can continue. But even in an
unlikely, far less optimistic scenario, with productivity growth shrinking to 1.3 percent, wages
would rise by 38 percent in real value.35 Here again, the catch is that productivity gains must be
fairly shared in order for these wage increases to actually happen. The last time workers received
a fair share of the nation’s productivity growth was in the late 1990s, when the economy was at
full employment. If we are truly concerned about the next generation, getting to full employment
should be the government’s preeminent concern.
Senior analyst Mijin Cha of the public policy organization Demos began a December 2012
briefing paper with the question “Why Is Washington Reducing the Deficit Instead of Creating
Jobs?” It’s a question that confounds many observers. We’ve just made the analytical case for
job creation as the top priority. The public supports it too. Exit polls after the 2012 election
indicated voters wanted the White House and Congress to focus on job creation once they
got back to work.36 In 2011 and 2012, polls indicated consistently that the public favored job
creation over deficit reduction by two to one margins.37, 38 See Table 1.1.
However, the same polls found that wealthy people were much more likely to favor deficit
reduction over job creation.39 “One reason that the affluent may be less concerned about job
creation,” Cha wrote, “is that they have generally been less affected by high unemployment
rates and the economic downturn than other groups.”40 Because wealthy people make up the
largest share of the political donor class, they have a disproportionate say in American politics.41 Cha’s point is that in order to focus policymakers’ attention on the issues that matter to
non-wealthy Americans, there must be a way to compensate for or otherwise respond to the
disproportionate influence of money on national policies.
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